Workers’ compensation fraud is a continuing problem in California and costs the citizens billions of dollars every year. We commonly hear about workers’ compensation rates being high, but much of that is created by employers commit workers’ compensation fraud by lying to their insurance company about the number of employees they have or misrepresenting an employee’s job duties so they can pay a lower rate.
Common situations where employers commit workers’ compensation fraud include:
- Falling to obtain any workers’ compensation insurance.
- Giving fraudulent information to an insurance company, like under-reporting payroll or misclassifying employees’ job descriptions so that a workers’ compensation policy can be obtained at a reduced rate.
- Providing false information to avoid, deny, or discourage employees from pursuing workers’ compensation claims.
- Paying an employee’s medical provider directly for medical treatment for a work-related injury
In October 2019, a Rancho Murrieta man and the owner of Kelly Roofing Company, Herbert Allen Kelly III, was arrested for workers’ compensation fraud. It was alleged that from 2014 to 2018, Kelly reported he had no employees and $0 in payroll; however, it asserted that Kelly has up to 15 employees during that time and owed about $50,000 in past unpaid premiums.
In a statement, Insurance Commissioner Ricardo Lara said, “When business owners operate in the underground economy, they are cheating the system and create an unfair advantage that puts legitimate businesses at risk. We all pay the price for insurance fraud through increased costs for services and higher premiums.”
Workers’ compensation fraud is a wobbler, which means, depending on the situation, it could be charged as a misdemeanor or as a felony. If accused of workers’ compensation fraud and charged as a misdemeanor, you could be punished to up to 1 year in jail and a fine of up to $150,000, or double the amount of fraud, whichever is greater. If you are charged with felony work comp fraud, you could face possible jail time of 2, 3, or 5 years in prison and a fine of up to $150,000, or double the amount of fraud, whichever is greater. Also, you may be required to pay restitution to the victims or paying thousands of dollars in unpaid premiums to the insurance company.
Workers’ compensation fraud is a very serious crime. If you your employer has been paying you under the table, or is committing fraud, please contact a Sacramento Workers’ Compensation Attorney today to see what rights you may have.